Home Managed VAS NFV – No Longer Just a Theory!

It isn’t an understatement (or, indeed, overly optimistic) to state that since its introduction in October 2012, the concept of Network Functions Virtualization (NFV) has created ripples in the networking industry. And why not-it promises greatly increased agility, cost saving and accelerates the time to market a new service. In other words, it sets the tone for a new, more efficient way of conducting one’s business.

Despite running the risk of spouting technical jargon and losing my audience, I feel it’s pertinent to provide a sketchy description of NFV, at the very least. So, here goes; NFV decouples network functions from underlying hardware so they run as software images on commercial off-the-shelf and purpose-built hardware. It does so by using standard virtualization technologies (compute, network, and storage) to virtualize the network functions. The objective is to reduce the dependence on dedicated, specialized physical devices by allocating and using the available physical and virtual resources only when and where needed.

Let’s look at two simple examples demonstrating the benefit of NFV-a virtualized firewall or a load balancer. Instead of installing and operating a dedicated appliance to perform the network function, NFV allows operators to simply load the software image on a virtual machine (VM) on demand. In a mobile network, examples include virtualizing the mobile packet core functions such as packet data network gateway (PGW), serving gateway (SGW), mobile management entity (MME), and other elements.

Sounds good, but what is the fuss all about? Well, that’s the interesting bit-NFV didn’t become a sensation overnight, it was, in fact, struggling to jostle its way to the forefront. Currently, though, it is on firm footing-it has moved from merely being a theory on paper to having tangible value.

For years, telecom experts have droned on and on about how NFV would reshape the industry, providing numerous benefits ranging from lower CAPEX and OPEX costs to more agile service delivery. Now, every telecom stakeholder worth their salt are ramping up their investment in NFV to keep competition at bay and emerging the numero uno. Let me quickly paint a picture of its progress-over the past year, year, the industry has successfully passed from a normative phase where specifications and use cases were determined, applications developed and proofs of concept and demonstrations were successfully conducted.  Today, we are moving into the next phase where NFV applications move into operation in production networks.

All this, needless to say, has boosted its locus standi in the networking industry. Shall we examine its success with a simple example? According to a study released by Research and Markets, the global market for NFV is expected to expand at a compounded annual growth rate of 83.1 per cent between 2015 and 2020. By the end of 2020, NFV revenues are expected to reach $8.7 billion. No lightweight technology, this!


So, why are telecom players suddenly sitting up and paying attention to NFV? With all the benefits mentioned so far (yes, there are more to come), wasn’t it a rather obvious choice? Well, things were simpler back in the days when the telecom industry was considered a “poster-boy” sector. Things have changed today-and how!

To begin with, telecom operators have to contend with a myriad of challenges today. Traditionally lucrative revenue streams-i.e. voice and video are losing their shine, a fact compounded by the rise and rise of over the top (OTT) players. If that weren’t enough, these players provide the same content on their data channels.

To add to their woes, the days of enthusiastically setting up infrastructure to accommodate these services are long gone. Not that they don’t intend to, it’s just that data is expanding faster than the speed of light and infrastructure is required to grow in tandem, to handle all that data traffic. Now, as every telecom stakeholder knows, infrastructure doesn’t come cheap and prices have touched the sky (or are well on their way to). But, subscriber acquisition has been slow at best. The net result is that operators are frantically chalking out new strategies to monetize their services, but are struck with the realization that their networks need to become more agile so they can introduce new services more quickly.

Shall we look at an interesting analogy to simplify the argument? Well, visualise a warehouse store whose business model hinges on selling products at low prices and at high volume. These products are usually packaged in bulk and marketed to businesses and families, people who tend to “stock up” as opposed to people who tend to “pay as you go” for single servings. The business of networking largely follows the same model. Operators shell out big bucks up front to purchase networking equipment and appliances. They plan for peak capacity and rack and stack devices. They want to be certain that the investment they made in the beginning in hardware will pay off, so they carefully evaluate and think a million times over before opting for a shiny, new service.

Meanwhile, as customers begin to avail of network services in the “pay-per-use” model of cloud compute, storage, and application services, operators begin to feel the pinch. Simply put-their revenues are barely able to trot alongside the cost of their goods and services. Well, not immediately, anyway.

This is where NFV comes in. Continuing with the analogy, the technology offers the vast array of choices, coupled with the accessibility and smaller helpings offered by the store. In technical terms, it offers operators a method to obtain the right amount of network functions at an appropriate time. By reducing the need for dedicated hardware to deploy and manage network functions, operators save on space, power, and maintenance costs, amongst other benefits. Virtualization and cloud also enable on-demand availability, higher speeds, and greater functionality.

In fact, the power of NFV has been tested in the real world too. Cisco recently announced major NFV deals with some of Europe’s largest telecoms, including Telstra, Telecom Italia and Deutsche Telekom. Of course, the appeal of working with Cisco is the ability to use NFV to extend managed services to traditionally underserved markets. Deutsche Telekom, for instance, is reportedly planning on deploying VPN services to small and medium-sized businesses in Hungary, Croatia and Slovakia. With NFV, the telecom can launch various applications and other managed services to customers quickly and at a lower cost.

Similarly, Spain’s Telefónica SA recently inked an agreement with HP to implement NFV and help the telecom overhaul its network structure. With this, Telefónica SA officials are optimistic that their reliance on expensive equipment will be reduced and instead utilize more manageable network assets.

Now, let’s place this wonder technology in the context of managed services. When one thinks of managed services, one visualizes the aim to be the end-to-end management of a complex fragmented telecom eco-system to ensure better service availability. With NFV taking the spotlight, the managed services domain isn’t expected to undergo a sea change (well, not immediately anyway), but the focus will change. This essentially means services such as security management, enhanced service availability, system level availability, co-ordination between different network elements, etc will take centre stage.

Of course, this doesn’t in any way imply that NFV will have a negligible impact on managed services. Far from it, the process may be slow but definitely steady. In fact, according to BT, four key areas where NFV can pack a real punch are; virtual data centers, virtual CPE, traffic engineered services across the Wide-Area Network (WAN), and value-added services within the network. In short, BT believes that with NFV, WANs can adapt to local traffic conditions and self-heal on failures. What’s more, virtualizing network services for the enterprise on to a shared platform on the branch can reduce deployment time for new services. And, virtualizing value-added services on to a shared infrastructure can increase service flexibility, turning up service on demand.

In a nutshell, while NFV is no longer the dark horse of the networking world, a few lingering issues will need to be sorted out before it can reach its full potential. As per Analysys Mason, the following critical areas will require significant work over the next two to three years to create the proper base for realising the NFV-enabled promise of being important, not just relevant, in the digital economy:

  • Establishing a sound business case for NFV
  • Planning business and network evolution priorities with revolutionary technology
  • Managing organisational and process changes.

The good folks at the firm have also established a timeline illustrating the parts of network operations that are likely to benefit from NFV during the next decade:


 [Source: Analysys Mason, 2015]

Net, net, utilizing NFV isn’t a question of time. It is a question of execution. Let’s get it out of the way once and for all-NFV is not a fad, it isn’t a trend or a flavor-of-the-week technology. It is here to stay and telecom players are scrambling to leverage it to the fullest.

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